Friday, May 07, 2010

Political Notes 5.7.10

As the economy “improves,” the volatility in financial markets as well as the quality of life continues to deteriorate. The anomaly is not really inexplicable. What is missing is accurate reporting about what is going on. The government is desperate to have us believe that everything is on the mend. Despite the fact that “they are rioting in Africa,” or rather, in Greece, all is well. Except, that all is not well.

The fact is that the VIX, the market volatility index, is spiking and Wall Street had a wild ride on Thursday – down nearly 1000 points intraday.

The dismay sown by the Communists in Greece has risen to the level of a few fatalities. So, while a loan package via the IMF and Germany has been extended, the rest of the PIGS will soon arrive with their collective hands out. That’s when the fun will begin in the Eurozone – and that’s when it will start to really get interesting here in America.

We have Goldman Sachs, an investment bank that took TARP money because it was “too big to fail” unlike Lehman -- which had a hand in bringing down Greece through its “creative accounting” and credit-default swaps. GS is now arguably facing a criminal investigation – which the populace has been calling for, for years. The Eurozone is facing collective bankruptcy or at default on its Sovereign debt and the U.S. is facing the possibility of a double-dip recession. The current improvement in employment numbers may, in fact, be the predicted temporary rise in spring fever/seasonal employment for Small Business. Schiller, the Yale economic guru, has predicted a huge coming increase in foreclosures brought on by Alt-A and Prime loans which will reset this year and have a chilling effect going forward. The fact that nearly one third of all homes in America are worth less that the mortgage is important. Those that bought homes with the $8,000 tax credit have been told that the value of their homes dropped before the ink was dry on the loan documents. As a backdrop to all of this, local economies from States to Counties, to Cities, to Villages have become the antagonists towards the one source of energy that can help solve the crisis – Small Businesses in America.

With fully 65% of all jobs emanating from this source, it has become the target instead of the savior for every civil service agency from the IRS, to the NY State Tax Department, the NYC Traffic Enforcement Bureau, and the Worker’s Compensation people, ending with Code Enforcement personnel, which initiate fines. The list of antagonists to the energy and drive needed by Small Business owners is growing as the deficits caused by the Wall Street/Banks/Mortgage Broker fiasco plays out.

The credit default swaps and phony mortgage products that were signed off on by unsuspecting borrowers – fueling the CDO’s and SIV’s that were sold off to pension funds, small banks, Countries, Cities, States, Counties and Villages across the country – are now spawning legions of civil service employees looking to make up the losses while creating a justification for them to keep their own jobs. Soon government will have no subjects to collect from and Hannibal Lector will be in charge of the feast.

This is being played out with the same tactics used by the King.

Threaten and tax the people -- who are the victims. Why? It’s easier than going after the banks. It’s cheaper. And, because we can.

But, why are we killing Small Business? It is the real Goose that laid the Golden Egg in America. This is the conundrum which begs a political answer in this country -- if we are to succeed.